THE POWER OF THE MANY

The main issues dogging our country -- both in the public and private sectors, are the inadequacy of our management capability and lack of finance, mostly in that order.

More than 20 years of chaos in the 1970s and 80s interrupted our progress in the identification and development of management talent. In recent years there has been some transfer of skills from foreign owned companies, but all observers agree this needs to be speeded up.

Our business schools are hampered too by the country’s history, with none of our business faculty boasting very real time experience in the rough and tumble of the real business world.

Management is critical because money follows good management, which explains why we suffer from a lack of money to finance our most critical public sector needs or grow our businesses.

Last week I had the pleasure of interviewing Karim Sadek one of the managing directors of Egyptian investment firm, Citadel Capital.

Citadel Capital is the firm that is in the process of taking control of RVR, the railway firm overseeing the Uganda and Kenya railways. Lead investor Sheltham has already sold 49% of its interest to Citadel with the remaining 51% pending approval from international lenders.

Citadel which opened its doors to business in 2004, currently manages $8.3b in investments, which is about the size of the Ugandan economy, spread across 15 industries in 12 countries in Africa and the Middle East. This portfolio has been cobbled together from an almost standing start – the founders started with $400,000. And ion the last six years they have returned $2.4b to their investors.

What kind of manager do you need to be accumulate a portfolio of almost $10b in six years?

And in that question lies the answer to our inadequacy.

Citadel borrows and invites investors – institutional or individuals, to participate in its projects. These financiers are not charitable organizations, they want to see a return on their funds, the higher the better and with as little minimal risk as possible.

One of the key criteria investors are looking for in placing their money is the quality of the management, does their record show they are able to consistently, invest money profitably?

Extrapolating to our situation as a country, as business, as individuals (why wont the bank give me that loan?) we are broke because we are unable to show managerial capability.

And as CHOGM has shown and all the donor funding that has flowed into this country since independence, or our inability to create business that can compete even nationally, leave alone regionally, we are severely wanting in the area of management – whether it means showing a return to our citizens, shareholders or ourselves.

The question then becomes what kind of managers do we need to attract significant funding?

I was happy to read that in Sheema county, Bushenyi district several Savings and Credit Cooperative Organisations (SACCOs) have banded together to form a SACCOs union.

In effect they are graduating to managing larger and larger entities, there will be some hiccups without a doubt and they may even collapse all together because the old managers could not rise to the task of managing not only bigger money, but more staff and higher expectations.

You build managerial capacity through experience – we have MBAs flowing out of ears already, and the experience from this SACCOs union can be transferred elsewhere.

Several useful lessons can be derived from SACCOs the ability to aggregate resources and secondly, the ability to delegate the management of these resources to people outside ourselves.

The challenge of managers, entrepreneurs is the inability to let go of “their” thing
There is only so much an individual can do in terms of growth before the strain starts to tell on the business and the person.

Growth is not done for growth’s sake, but with size comes the ability affect more people’s lives. Small is beautiful but big can be useful too.

Back to Citadel.

Citadel divides its investments into platforms of which there are 18, Managing Director and partner, manages mining and quarry, upstream oil and gas and now railway platforms which in all are worth a few billion dollars under management.

He foresees putting down $150m in investments in RVR over the next three years and his target is to oversee the turnaround of the concession to the point that they will more than quadruple freight carried on the line from its current one million tones.

And oh yes, his fortieth birthday is not due for maybe another three years.

Published March 2010, New Vision